Question

Movers Company manufactures sneakers. Production of its new sneakers for the coming three months is budgeted as follows: August 28,000 September 50,000 October 33,000 Each sneaker requires 2.5 hours of direct labor time. Direct labor wages average $16 per hour. Monthly variable overhead averages $10 per direct labor hour plus fixed overhead of $4,500. What is the total overhead budgeted for the month of September

Answer 1

Answer:

$1,254,500

Explanation:

Solution

Recall that:

Production of sneakers for three months budgets were :

August= 28000

September = 50,000

October = 33,000

Each sneakers requires labor time = 2.5 hours

Labor wages average = $16.

Now,

The total overhead budgeted for the month of September is calculated as follows:

The total overhead budgeted for the month of September = Variable overhead + Fixed overhead

= (50,000 units * 2.5 direct labor hours per unit * $10 per direct labor hour) + $4,500

= $1,254,500

Therefore, the total overhead budgeted for the month of September is $1,254,500

Answer 2

Answer:

Budgeted overhead cost =$1,250,000

Explanation:

Budgeted overhead for the month of September = Total labour hours × overhead rate per hour

Total labor hours =  standard hours  × budgeted production units

=2.5 hours × 40,000= 125,000

Budgeted overhead cost Total = $10× 125,000 =$1250000

Budgeted overhead cost =$1,250,000